BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Kevin Murray, Chairman

                                           1368 (Perata)
          
          Hearing Date:  5/8/06           Amended: 4/24/06
          Consultant:  John Decker        Policy Vote: EQ 5-1
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          ____
          BILL SUMMARY:   SB 1368 would require the California Energy  
          Commission (CEC) to set emission (e.g., pollution) standards for  
          those entities providing electricity in the state.  The bill  
          also would require the California Public Utilities Commission  
          (CPUC) to prohibit electricity providers and corporations from  
          entering long-term contracts which do not meet the CEC's  
          standard.
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2006-07      2007-08       2008-09     Fund
           Electricity costs      ----------- unknown, see below  
          ------------           GF & SF*
          Develop & promulgate 
              regulations        $50                               
          Special**

          *The costs paid by departments would be financed with the  
          General Fund and all special funds which are used to finance  
          operations within buildings.
          **These costs are likely financed by the Energy Resources  
          Products Account                  
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          ____

          STAFF COMMENTS:  This bill may meet the criteria for referral to  
          the Suspense File.  This bill requires the CEC to set standards  
          for greenhouse gas emissions from powerplants.  The standard may  
          not exceed the average emissions of a comparable combined-cycle  
          natural gas plant.  The bill directs the commission, when  
          setting the standard, to onsult with the Air Resources Board.  

          The bill prohibits certain electricity providers from making a  
          long-term commitment to electricity supplies unless the  
          electricity generated under the commitment meets the CEC's  
          emission standard.  "Long term" is defined as three years.  The  










          electricity providers covered under this provision are  
          electrical corporations, electric service providers, community  
          choice aggregators and local public electricity utilities. 
          
          Under the bill, the CPUC may not approve a long-term commitment  
          that violates the CEC's standard.  The CPUC may adopt rules to  
          monitor and enforce the prohibition among corporations,  
          providers and aggregators.  The CEC is to enforce the  
          prohibition among local public utilities.
          
          The bill imposes some costs on the CEC and air board to develop  
          emission standards and promulgate regulations.  These costs are  
          unknown, but could be in excess of $50,000.  These costs would  
          likely be borne by special funds, primarily the Energy Resources  
          Products Account (ERPA).  The CPUC says it will incur no new net  
          costs to monitor or enforce the bill's provisions.

                                    - continued -
          Page 2
          SB 1368 (Perata)

          In addition, to the extent the regulations limit the number of  
          suppliers who may provide power to the California market, the  
          bill could increase wholesale electricity costs.  If those costs  
          are reflected in the electricity rates the state pays, then the  
          state's long-term utility costs would rise, potentially  
          beginning in the budget year.  These costs, potentially major,  
          could be charged to the General Fund and most special funds.